Wednesday, July 20, 2005

The briefing the SECDEF missed- Part II



In part one of this post I explained why it was highly unlikely that the SECDEF really did not know about the USFSPA ( Uniformed Services Former Spouses Protection Act) and grievous injustices it causes to current serving members of the armed forces and retired members. Tom Philpott (Early Bird access required) published a synopsis hoping that the SECDEF receiving a question on the subject, might breathe new life into the effort to bring real reform to this vitally flawed piece of legislation.

















Like I said before, it's doubtful that the SECDEF did not know about this law, but for fairness sake lets take him at his word. Here is the briefing he should have gotten:

(MANY liberties have been taken here, and those of you who work(ed) in the five sided wind tunnel know that briefs don't work this way.......humor me!)

Skippy: "Good morning, Mr. Secretary."

SECDEF: "Good morning Skippy, what's on the plate today? Why should I get on board with changing this law and why is it such a big deal to that LTC and all those veteran's groups?"

Skippy: "Sir, there are 3 reasons that you should actively support and campaign for a change to the law. First, keeping the USFSPA hurts your long term efforts to reform both the military and the civilian personnel system by treating military retirement differently than any other government retirement system. If you want to a Human Capital strategy that makes greater use of civilian workforce and keeps the military folks around to utilize their full potential, changing the law makes sense. Also if you want to move people from uniformed to civil service or to contracts, this is one potential stumbling block.

Second, the divorce rate in the military is higher than for civilian couples and is rising. According to Army data, the spike in divorces is particularly high among officers, attributed to the frequency of deployments to wars in Iraq and Afghanistan. More than 3,300 Army officer marriages ended in divorce last year, up 78 percent from a year earlier and triple the number in 2000. Among Army enlisted soldiers, more than 7,100 were divorced last year, an increase of 28 percent over 2003 and 53 percent since 2000. Its a quality of service and a quality of life issue.

Third, its an issue of basic fairness and equity. Fixing this law will keep faith with the troops and be in line with other DOD efforts to fix antiquated and outmoded practices, just like was done with the repeal of Redux Retirement. Also as a bonus, getting DFAS out of the collection agency business frees some resources up for more productive pursuits. "

SECDEF: "Now wait just a minute, the lawyers tell me that dividing up a pension is an old, established, part of divorce law. "

Skippy: "Yes sir, that is true, except that a military retirement pay is incorrectly valued as property. Furthermore, unlike a usual pension that is not collectible till much later in life, you have many people departing the service in their 40's; a fact that you yourself have lamented and are seeking to change. The payments that are made are not a pension in the traditional sense. For many years after leaving, these folks are part of the Fleet Reserve Force and in really times of dire emergency, or unique skill sets, can be recalled to active duty. It's to your benefit , sir, to support the line of thinking, backed up by federal statute that military retired pay is "Retainer Pay", described by even the United States Supreme Court as "reduced pay for reduced services". The military member does NOT pay into a pension fund or retiree's plan to receive his or her Retainer Pay. When the career serviceman or servicewoman accepts retired pay, they obligate themselves to be subject to recall to military service, to be subject to the Uniformed Code of Military Justice and are members of the reserves. The retired military member is being paid a retainer for continued obligation to the United States Armed Forces. "

SECDEF: "I've been told that idea is subject to dispute. "

Skippy: "Yes sir it is. There are conflicting court rulings on the subject. However DOD has ample precedent in its own regulations and comptroller general decisions that support the rationale. Also if it was truly property, why does the IRS treat it as income for tax purposes? The I.R.S. Code 26 C.F.R. S 31. 3401 (a)-1(b) (1) (ii) states that military retired pay is a "Current Wage."

I think you will agree that most, if not all military retirees understand that they have an obligation to continue to serve their country and so by treating military retirement as income you are furthering your objective to increase the years of useful service from the force.

Another fact that you should consider is that all other forms of marital property are valued at what they are worth at the time of the divorce. Not so the military retirement. The odds are pretty good that LTC Larabee was not a LTC when she got divorced, more probably enlisted or a junior officer. So her ex-spouse has contributed nothing to her advancement within the Army. Yet the value of the money he will receive is based on her current rank, so it is in effect, a windfall to her ex spouse that is unearned.












At least when a 401K is split up , the loss is real and immediate and the service member can begin efforts to recover, by changing contributions or investment strategy. There is no such option with military retired pay. Its based on an expectation of value that goes on and on and on. "

SECDEF: "But Dr. Chu informs me that veterans are all fairly well off and that was why we were right to oppose concurrent receipt last year. "

Skippy: "Mr Secretary, current income has nothing to do with the payments. Otherwise, individual service members would be able to petition in court to have the amounts reduced and or vacated, when spouses go on to match or equal the income of the retired service member. Furthermore, DOD is going to have to pay the same amount out anyway, all we are discussing is who the payments should go to if there were any justice involved here.

Also I would point out, that programs such as Troops to Teachers which bring real value to American society, or former Secretary Powell's efforts to bring military retirees into the Foreign Service are predicated on the ability of the retirement pay to offset the relatively poor salaries of both professions. America is getting bang for its buck in these programs, however folks like me have no choice, we have to pass on these service opportunities and go where the money is."

SECDEF: "Ok, lets wrap this up. What should I do and what are your recommendations? "

Skippy: "Sir, your should not underestimate the moral authority your office brings to the argument. Obviously the most desirable course from my standpoint would be to issue a statement in strong language, urging repeal of the USFSPA by Congress. Now the DOD lawyers are going to tell you that is a dangerous course because it will force 1000's of divorce cases to be reopened. That's exactly what should happen. Why? Because it will force military retirement to be treated as income to the retired spouse and then the former spouse would have to make a case that she really needs it. Many would not be able to meet the burden of proof required and would have to get off their fat duff and get a job......Sorry Mr Secretary, I tend to become passionate on this subject.

Failing advocating full repeal, at a minimum, you should urge Congress to amend the law as follows:

1) Make payments stop on remarriage of the former spouse.

2) Figure payments based on the rank the service member got divorced at and the number of years of service turned in at the time of the divorce. In other words end the windfall payment that comes from promotions they did nothing to help.

3) Take DFAS out of the garnishment business. Let the ex spouse have to seek payment from the retired military member.

4) Amend the law to make it clear that military disability payments are not divisible under the act.

Direct Dr. Chu to make this a priority and move it to the front burner, something he has been very loathe to do.

The important point Mr Secretary is to speak out forcefully from the "bully" pulpit that you have as Secretary of Defense. Your words have impact and you can make a real difference in changing this grossly unjust, and unfair law. "

SECDEF: "Well, I'll give you this Skippy, you certainly are impassioned in your feelings. I'll give this due consideration. "

Skippy: "Always sir, thank you for your time. "



















You bet it is!

Skippy-san

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